Shareholders aren’t just seeing their stock prices swell, they are getting paid too. The dividend, its importance demoted over the past couple of decades by the tech boom, is having a moment again, and Big Tech follows Apple into dividends.
Hamza Shaban for Yahoo Finance:
The dividend trend reflects the double role that tech giants hold in society and on Wall Street. They want to be perceived as growth engines, obsessed with frontier tech and fixated on reshaping the future. But they are also mature, cash-rich companies with market caps that start with a “T.”
Startup versions of these companies would scoff at the idea of paying back a dividend. It suggests their growth days are behind them, that executives don’t have a vision for how to deploy their resources. But in this post-pandemic, pre-AI moment, Big Tech wants to prove they can do two things at once: build the infrastructure to dominate the coming era and show investors they have the fiscal discipline and confidence to return value consistently.
That the recent wave of dividend announcements has come alongside disclosures of ballooning AI spending reinforces the dual message.
Earnings are rising and with it are massive stock buybacks. The recent wave of repurchases, including Apple’s record-breaking $110 billion plan, is the largest sum of buybacks since 2018.
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MacDailyNews Take: While Apple’s dividend is nothing to write home about – now up to 25-cents per share – Apple’s buybacks are unmatched. In 2018, it was Apple that initiated the buyback boom with a then-record $100 billion program. Apple then launched five other share repurchase programs: $75 billion in 2019, $50 billion in 2020, $90 billion in 2021, $90 billion in 2022, $90 billion in 2023, and, now the record $110 billion in 2024. No other firm, tech or otherwise, comes close.
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Buybacks are much better than dividends because capital gain is tax free where I live. But unfortunately a lot of people don’t understand this.